• by David Frenkel
Originally published in the OFLM 2023-10 edition
Overview
This article analyzes the recent case of Yu v. Xiao (2023 ONSC 4781) and reviews the principles relating to interim spousal support motions based on the reported Ontario decisions of 2022.
In a nutshell, the recent decisions indicate that even though there are recurring legal principles that courts continue to consider, rough justice prevails with evidence being the major factor affecting the direction and the extent of where the judgement ultimately lands.
Introduction
The case of Yu v. Xiao is yet another reminder that when it comes to seeking temporary spousal support orders, the results of rough justice can swing both ways depending on the evidence being presented.
But beyond any single case, it is also interesting to see how courts have treated spousal support motions in general with respect to the legal principles reviewed and applied.
Background
In Yu, the parties were married for approximately 30 years with one adult child. They separated in 2019 (as claimed by the husband) or 2021 (as claimed by the wife).
The wife appeared to have strong compensatory and non-compensatory bases for spousal support, in part due to taking care of the parties’ child and her leaving her job as a physician in China to help the husband in his businesses.
The husband’s story was not as straight forward – to say the least.
The husband appeared to have created various corporations during the marriage, including a golf course with a claimed annual revenue by the wife of $1,000,000 and different residential development projects. Properties were purchased using investment funds, third party mortgages and vender take-back loans. After the parties separated, the husband apparently forced the parties’ adult child to transfer her corporate shares to him which he then transferred to his second wife and cousin. And if that wasn’t enough, he also transferred shares in Canadian and Chinese corporations and re-organized the corporate structures. This resulted in the husband no longer being a shareholder of any of the Canadian entities.
Among the husband’s other shady actions, he
- removed $480,000 from the parties’ joint bank accounts,
- stopped paying the matrimonial home’s mortgage (resulting in a power of sale),
- stopped paying the wife’s expenses and car lease (the car subsequently being towed away),
- started a Divorce Application in China in 2023 despite the wife having already commencing her Application in Ontario in 2022 (spousal support apparently is not awarded in China),
- sold a golf course in June 2023 without the wife’s consent and possibly below market value with the sale proceeds having been deposited in an unknown account,
- claimed his income to be $27,000 while showing annual expenses of $200,000 on his sworn financial statement,
- claiming to receive monetary gifts from his father and other relatives to pay for his lifestyle, and
- failed to provide full disclosure resulting in an order to provide numerous paragraphs from the wife’s Request for Information within 30 days.
Support claims
The wife claimed support of $39,000 per month based on an imputed annual income to the husband of $1,600,000 and retroactive spousal support of $243,507.
Justice Himel referred to Di Sabatino v. Di Sabatino (2022 ONSC 334) which reiterated the concept that the court aims to achieve “rough justice” on interim support motions without engaging in comprehensive review and analysis of the parties' respective circumstances.
Additional factors for interim spousal support motions as noted by Justice Himel were as follows:
- support should be based not on a budget of expenses of the recipient but on income sharing (Cassidy v. McNeil, 2010 ONCA 218);
- the parties’ needs and means take on greater significance and the recipient’s need to achieve self-sufficiency is of lesser significance;
- the payor’s “means” is given an expansive interpretation (Leskun v. Leskun, 2006 SCC 25); and,
- support should generally fall within the SSAGs unless circumstances dictate otherwise (Blatherwick v. Blatherwick, 2012 ONSC 2456).
In ordering $15,000 per month in spousal support, Himel J. imputed the husband’s income to at least $550,000 despite the husband’s claims of near poverty. The court also considered a number of factors including (a) the parties’ lifestyle during the marriage ($3,000,000 home, luxury vehicles, expensive restaurant meals, significant LCBO expenses, their travels to China); (b) the wife needing time to return to the workforce (she was taking a Chinese medicine re-training program); and (c) the wife’s dire financial circumstances (dissipating her funds and obtaining loans for living expenses).
The court also imputed income to the husband as his Income Tax Returns did not reflect the money that was available to the parties. “Evidence of a lavish lifestyle provides a basis upon which inferences about a party’s access to undisclosed income may be drawn.” (Bak v. Dobell, 2007 ONCA 204)
2022 year in review on interim spousal support motions
The case of Yu v. Xiao is just one of many examples of a motion for interim spousal support. However, to appreciate what patterns or principles emerge when courts approach these issues, often times it is helpful to look at more than one sample.
With that in mind, it was interesting to review all the reported Ontario decisions in 2022 that addressed interim spousal support motions and to see how the legal principles looked like from a bird’s eye view.
Although not mentioned in detail in this article, motions for spousal support in other provinces in Canada had similar principles. The 2022 examples of reported motions for spousal support in provinces other than Ontario included M.T.P. v. R.L.B. (2022 BCSC 156), J.T. v. C.C. (2022 PESC 12), Lyons v. Lyons (2022 SKQB 70), Chwilkowski v. Tylicka (2022 BCSC 732), Ishwarlall v. Ishwarlall, (2022 BCSC 794), Hildebrand v. Hildebrand, (2022 MBQB 139), Buliziuk v. Buliziuk (2022 BCSC 1187), Kadyschuk v. Behan (2022 BCSC 1370), Chiveldave v. Chiveldave (2022 ABKB 647), Greenough v. Greenough (2022 BCSC 2051), and King v. MacDonald (2022 ABKB 736).
In nearly all of the Ontario cases, the legal analysis started with the legislative provisions in s. 15.2(4) and s.15.2(6) of the Divorce Act or s. 33(8) and s.33(9) of the Family Law Act – depending on the legal jurisdiction of the parties. As a refresher, the Divorce Act states the following:
s.15.2(4)
In making an order under subsection (1) or an interim order under subsection (2), the court shall take into consideration the condition, means, needs and other circumstances of each spouse, including
- (a) the length of time the spouses cohabited;
- (b) the functions performed by each spouse during cohabitation; and
- (c) any order, agreement or arrangement relating to support of either spouse.
s. 15.2(6)
(6) An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should
- (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
- (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
- (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
- (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.
After reviewing the legislation, the court typically listed the relevant principles that interpret the legislation. It then determined the extent compensatory and non-compensatory entitlement factors were present followed by calculating support using the Spousal Support Advisory Guidelines (SSAGs).
The following cases included substantive principles and discussions that complemented the theme of this article:
Fitzgerald v. Fitzgerald
Simply referring to the legislative provisions without applying the facts can result in prejudicial outcomes. This occurred in Fitzgerald v. Fitzgerald (2022 ONSC 2445 at para. 37) where the court was unable to decide the issue of spousal support at a motion due to a lack of application of the facts. The court left spousal support to be determined by the trial judge.
Sondhi v. Sondhi & K. v. D.
In Sondhi v. Sondhi (2022 ONSC 202 at para. 11) and in K. v. D. (2022 ONSC 1071 at para. 17), Justice Papageorgiou referred to McConnel v. McConnel, 2015 ONSC 2243 and Faccio v. Faccio, 2018 ONSC 1225 and reminded us of the governing principles applicable to interim spousal support motions:
- The Applicant's needs and the Respondent's ability to pay assume greater importance;
- An interim order should be sufficient to allow the Applicant to continue living at the same standard of living enjoyed prior to the separation, if the payor's ability to pay warrants it;
- The court achieves rough justice at best — and does not embark on an in-depth analysis of the parties' circumstances;
- The court should not unduly emphasize one of the Divorce Act statutory considerations above the others;
- The need to achieve self-sufficiency is often of less importance;
- Interim support should be ordered within the range suggested by the SSAGs unless exceptional circumstances indicate otherwise;
- Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out; and
- Where there is a threshold issue, it becomes less advisable to order interim support.
Norouzi v. Bokharaei
In Norouzi v. Bokharaei (2022 ONSC 615 at para. 24), Justice MacPherson quoted Knowles v. Lindstrom (2015 ONSC 1408) and noted that the following general principles guide the court’s discretion when dealing with interim support motions:
It is well-established that interim support motions are not intended to involve a detailed examination of the merits of the case. Nor is the court required to determine the extent to which either party suffered economic advantage or disadvantage as a result of the relationship or its breakdown. These tasks are for the trial judge. Orders for interim support are based on a triable or prima facie case. An order for interim support is in the nature of a "holding order" for the purpose of maintaining the accustomed lifestyle pending trial…
MacPherson J. took the quote one step further and defined prima facia to mean “a standard higher than balance of probabilities” referring to the Blacks Law Dictionary definition:
At first sight; on the first appearance; on the face of it; so far as can be judged from the first disclosure; presumably; a fact presumed to be true unless disproved by some evidence to the contrary.
Justice MacPherson also referred to the principles in Knowles v. Lindstrom and Cassidy v. McNeil in his decision of Petersen v. Peterson (2022 ONSC 808). MacPherson J. reiterated that at motions, the court tries to achieve “rough justice” in the absence of the opportunity to carry out an in-depth analysis of the parties’ circumstances.
Haughton v. Corner
In Haughton v. Corner (2022 ONSC 869) Justice McDermot also added that with respect to evidentiary issues in interim spousal support motions:
… the court often sees affidavit evidence either denying cohabitation or a conjugal relationship, which often conflict with the recipient spouse's evidence as to the relationship. This does not mean that someone is lying; … there are at the end of the relationship, vastly different perceptions of that relationship and the elements of that relationship. One party's perception of the nature of cohabitation or whether the parties are spouses is not necessarily determinative of whether the parties come within the statutory definition.
Because of this and the evidentiary challenges on a temporary motion, the courts have relaxed to some extent the standard of proof for entitlement to spousal support. …
Ford v. Waldhart
With respect to the issue of prima facie, Justice Shore in Ford v. Waldhart (2022 ONSC 6277) added that the party claiming temporary support has the onus of establishing that there is a triable (prima facie) case, both with respect to entitlement and quantum – with the merits of the case in its entirety to be dealt with at trial.
S.M. v. C.B.
In S.M. v. C.B. (2022 ONSC 340) Pinto J. referred to the “seminal case” of Samis v. Samis (2011 ONCJ 273) when determining temporary spousal support. The summary in Samis complements the principles already discussed above:
- Interim support is intended as a place holding measure in order to maintain the applicant's accustomed lifestyle (if possible) until trial.
- A complete enquiry is not required.
- Need and ability to pay take on a greater importance on temporary support motions.
- The need to achieve self-sufficiency is of less importance.
- Temporary support should only be ordered where a case for entitlement has been made out.
- Support should be ordered within the range of Spousal Support Advisory Guidelines unless there are exceptional circumstances.
Karabegovic v. Karabegovic
In Karabegovic v. Karabegovic (2022 ONSC 3153 at para. 11), Justice Chappel added similar principles with respect to interim spousal support motions but also noted that “In the event that a spousal support claimant cannot establish an arguable case for entitlement to spousal support, the motion for temporary relief should be dismissed, even if the claimant has need and the other party has the ability to pay.”
Mulik v. McFarlane
In the Ontario Court of Justice, the spousal support principles are similar, despite using the Family Law Act as the legislative basis. It was surprising to see that in 2022, there were nearly no reported ONCJ decisions on interim spousal support. The one case that was found was Mulik v. McFarlane, (2022 ONCJ 67 at para. 16), where Justice Sherr listed very similar principles as noted above but referred to Politis v. Politis (2015 ONSC 5997) as the source of those principles.
Additionally, Sherr J. added that “a temporary support award is a temporary order only and inevitably imperfect” and that it is meant to provide “a reasonably acceptable solution to a difficult problem until trial”.
Conclusion
On the one hand, a spousal support motion appears to be a simple step in the litigation process where lawyers can rely on the “rough justice” principle and easily obtain support for their clients.
However, underestimating the motion’s importance and being ill-prepared may result in orders that are prejudicial to your client.
Orders at motions can last a very long time – especially in jurisdictions where trials are hard to come by. Therefore, not getting enough support or paying too much can result in real financial consequences for either side.
And if one tries to subsequently vary a temporary order for support, the threshold is quite high and unlikely to be successful.
Therefore, the ducks really need to be in a row in the first instance.
Furthermore, what the above cases remind us is to not underestimate the power of evidence for past and present lifestyles. Simply claiming the parties lived a lavish lifestyle may not be sufficient without bank statements, receipts or affidavits from individuals that knew the parties. For example, if your payor client is claiming a frugal post-separation lifestyle, perhaps a lifestyle spending analysis may be of assistance from a certified business valuator. The parties’ sworn financial statements with supporting evidence can also be critical.
Lack of disclosure can also result in an adverse inference whether income is imputed to your client or not. It typically is better to over-produce income and banking information and show the court that your client has little if anything to hide.
And when it comes to first principles, go back to the legislative provisions and apply them carefully to the circumstances of your case. It is easy to overlook sections 15.2(4) and 15.2(6) of the Divorce Act especially when one has read them over and over again before. In practice, judges almost always start their decisions by reviewing them and determining their applicability before diving into the case law.
Do not forget that it is from legislation that the entitlement analysis begins. Therefore, if one does not take the time to see how each and every section of the legislation applies to a client’s case, one may miss a significant step in the process.
Finally, when using the SSAGs, remember to input the incomes and assumptions of the parties correctly. Differences in entries can have wrong outcomes that may be significant. Some examples include entering the differentiated incomes as listed in the Income Tax Return rather than just entering the Line 15000 amount. There may be tax/credit implications for employment income, dividend income, business income, etc. Also, the ranges in the SSAGs differ when the custodial parent is paying support versus receiving support, so make sure you adjust those assumptions in the program.
Also, judges find it useful when more than one SSAG calculation is provided. Do not assume that your income assumptions are the correct ones. The more calculations a judge can review, the more flexibility they will have when making their final decision.
With the above points in mind, your next motion for spousal support may still be a form of rough justice, but hopefully a little smoother around the edges.